Summer is already in high gear and most Americans are getting ready to take their yearly vacations.
Singles, couples and families are looking at their options and finalizing plans—beach, lake or amusement park.
A fourth option – a staycation – doesn’t sound especially exciting on the surface, but it might ultimately be a lot more valuable for your future. Instead of spending thousands of dollars on a trip that will be over in what seems like the blink of an eye, stay home and catch up on your favorite TV shows. Maybe go to a baseball game or try dinner at a new restaurant. You can use the savings to invest in your future: a down payment on a home.
And here’s the good news: Homebuyers no longer have to save up for the full 20% down payment. Today, with an average 1% down payment—or $2,000—opting for a staycation over a vacation may be enough on its own to get your through the front door.
Looking for other creative strategies to come up with a down payment on a home? Read on and get ready to make the move to homeownership.
1. Security Deposits, The Down Payment You Didn’t Realize You Had
Saving for a down payment may seem like an impossible task for a lot of young people who are currently renting, especially when accounting for high living costs and unexpected expenses. But the majority of renters already have a nice enough stash of cash that may be enough to cover the cost of a down payment all by itself.
According to the Census ACS survey, the median monthly gross rent in the United States was $959. Since renters pay an average of two months for a security deposit—most first-time home buyers may not even realize they have roughly $2,000 at their disposal.
That down payment you didn’t realize you had could make all the difference.
According to our 2017 Millennial Housing Outlook Study, 96% of respondents are more likely to buy a home knowing that they have the ability to tap their security deposit for the bulk of their down payment.
2. Just Say No to Instant Gratification
Craving a Starbucks latte? Looking forward to your weekly lunch with coworkers? These may seem like small expenses, but they will eat into your savings over time.
Even small changes add up to big savings. Think about bringing a brown-bag lunch to work instead of going out to eat. It could save you up to $2,500 a year. Skipping Starbucks and waiting for the next blockbuster film to hit streaming services will save a combined $1,000 in a year.
Achieving the dream of homeownership is far more gratifying than that daily dose of overpriced coffee.
3. Put Your Spare Change to Work
Micro-investing apps like Acorns make it easy to save by rounding up all purchases to the nearest dollar and investing the change.
Even the least-disciplined spender can get behind this surefire savings plan. Invest as little as $35 to $40 per week and save up to $2,000 a year—the average price of a 1% down payment on a home. Finally, a home for all that spare change!
First-time home buyers have more ways than ever to save for a down payment. Don’t let a few thousand dollars keep you from your dream of owning a home. Speak with a mortgage broker and get to work finding your financial resources that are hidden in plain sight.
Mat Ishbia is President and CEO of United Wholesale Mortgage, a Troy, Mich.-based provider of mortgages for independent brokers nationwide. One of the nation’s leading advocates of independent mortgage brokers and wholesale lending, Mat has changed the lending platform, turning UWM into a $23 billion company and a top national workplace.